What was the reported value of Cicis' related party receivable as of December 31, 2024?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
and certain internal control-related matters that we identified during the audit.
Dallas, Texas April 25, 2025
Combined Balance Sheets December 31, 2024 and 2023
| 2024 | 2023 | |
|---|---|---|
| Assets | ||
| Current assets: | ||
| Cash and cash equivalents | $ 1,854,735 | $ 2,931,372 |
| Cash and cash equivalents—marketing fund, restricted | 434,199 | 771,794 |
| Accounts receivable, net: | ||
| Trade receivables | 290,921 | 325,874 |
| Marketing fund, restricted | 2,395,119 | 2,537,488 |
| Related party receivable | 695,717 | 79,530 |
| Prepaid expenses and other current assets | 859,866 | 228,561 |
| Total current assets | 6,530,557 | 6,874,619 |
| Other receivables | 12,638 | 58,761 |
| Website, net | 150,333 | 194,333 |
| In |
Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 58–64)
What This Means (2025 FDD)
According to Cicis' 2025 Franchise Disclosure Document, the company's related party receivable was valued at $695,717 as of December 31, 2024. This receivable is recorded on the combined balance sheets and reflects the billing and payment of services provided by Cicis to its related-party affiliates. These services encompass shared costs such as employee and personnel services, accounting and financial management, legal and tax, human resources, information technology, and participation in retirement, welfare, and other benefit plans. The costs are allocated based on methodologies like proportionate revenue, headcount, or direct costs.
For a prospective Cicis franchisee, understanding related-party transactions is crucial because these transactions can impact the financial health and stability of the company. A significant receivable from related parties could indicate reliance on these entities, and any issues with these related parties could affect Cicis' financial performance. It's important to note that the related party receivable increased substantially from $79,530 in 2023 to $695,717 in 2024, which could signal a change in the volume or nature of services provided to affiliates.
Franchisees should be aware that related-party transactions are not uncommon in franchise systems, but they require careful scrutiny. The FDD provides additional context by detailing the nature of these services and the allocation methods used. Prospective franchisees should review these details and consider seeking professional financial advice to assess the potential implications for their investment. Understanding these relationships and their financial impact can help franchisees make informed decisions about joining the Cicis franchise system.